The relinquishment of the knife wasn't enough to cause any change in Daryl's stance, though he followed the movement with his eyes and made note of exactly where the knife ended up, in case he'd have to kick it out of reach momentarily. Then he was immediately back to watching Rick's face.

Either the situation with Ellis's companion was more dire than he was letting on, or he had to have other weapons somewhere — otherwise it was a damn foolish move, giving up his sole means of protection and defense like this. Each possibility was more concerning than the last. Desperation could drive people to do the most terrible things, and if this guy did have a stockpile of weapons elsewhere — while now knowing the location of their camp — what would prevent him from paying another visit later, to try and take whatever he wanted then?

He was certain Rick was already considering the same things and reaching similar conclusions.

Generally Daryl was still more inclined toward showing mercy than Rick was these days, if it served a practical purpose, but even he had his limits. Trying to deceive them was a gamble that rarely went in the liar's favour.